Now and again Dan Hilton posts some of his thoughts to try and understand himself. Enough said.

Friday, September 05, 2003

Dear Mr Hilton

Thank you very much for contacting us with regard to our proposed changesto higher education. The Labour Party values all comments and feedback andwe take the opportunity to read all emails and pass comments on. I wouldlike to explain why these changes are needed and what they mean foruniversities and students.

Our universities are a huge national asset. The number gaining degrees hastripled in the last two decades. The quality of research is strong and, atits best, world class. More overseas students are studying here. Recentyears have seen a dramatic increase in the number of new companies spun outof universities' innovation.

So it would be easy to coast along and leave things as they are. But thefact is that our universities are at real risk of decline.

High quality research helps to drive our economy but the competition fromother countries ? not just the US is growing. University lecturers andprofessors have seen their pay rise one-third as fast as the rest of theworkforce in the past 20 years. We are losing some our best researchersoverseas. Staff student ratios have nearly doubled in the last 20 years.There is a £8 billion backlog of infrastructure repairs. We need to keepexpanding the numbers going into higher education to provide the skills theeconomy needs. And the fact that those from the top three social classesare almost three times as likely to go to university as those from thebottom three is a national scandal we have to address.

In the short term Higher Education Labour in government has put in place anexcellent funding settlement ? which gives them a 6% increase over andabove inflation for the next three years - will help to tackle theseproblems. But we need a solution for the long term as well and that meanssustained extra investment and it means reform.

This means we are asking students to pay more for their education. Butlet's remember that we have one of the most generous student supportsystems in the world. And we are increasing that support. In additiongraduates, over their lifetime earn 50% more than non graduates and it isonly fair to ask them to pay part of the cost of getting a degree.Students who pay the full £1,100 fee are only paying about a quarter of theaverage cost of their university education.

Some argue that we are introducing a two tier university education. Butthe reality is that our nation already has a multi-tiered universitysector. The fact is universities are not the same. Some excel atresearch. Others at working with local industry. Others at teaching.Some universities get much more funding than others. Degrees from someinstitutions and some courses are ? when it comes to getting jobs afteruniversity - worth more than others. Yet the fee for every course at everyinstitution is identical. That is not fair or sensible.

Of course, there is a worry about whether the fear of debt will put peopleoff going to university. But to read some of the comments in the papersyou would think that students are currently debt free. At present theytake out maintenance loans of up to £12,000, plus their parents have to paythousands of pounds up front in fees ? and there are no grants even for thepoorest students. In fact the average debt today is £9 ? 10,000.

Our deal means that no parent need pay fees at all. Grants come back forthose from low income families. If your parents are not well off thegovernment continues to pay the first £1,100 of the fee. Universitiesexpand their bursaries. And those who do have to pay part or all of a feehave the option of postponing payment ? on an interest free basis - untilafter they graduate, when payment will be linked to their income.

We did look at different options ? for example, funding universitiesthrough a graduate tax. Like a graduate tax our system involves makingpayments after graduation linked to a graduate's ability to pay. But weconcluded that variable fees were:

o Fairer, as they more closely relate what a student pays to the benefitthey receive.

o Clearer, as they retain a direct link between the student as consumer,and the university as supplier. Graduate tax is simply paid to thegovernment and would result in universities continuing to be reliantsolely on the government allocations.

o Cheaper, as a graduate tax would cost the government much more toimplement ? even though it would only raise the same amount of money. Public spending would have to increase by at least £5bn ? money thatwould then not be available for schools and hospitals.

As for the Tories, insofar as they have a policy, it is to cap studentnumbers and cut funding. The Lib Dem alternative seems to be to forcestudents to study at home for the first two years ? so much for choice andfreedom for the individual.

Labour Ministers will be using policy forums to explain and debate ourproposals with local parties and communities over the next few months. Butthe Labour party believes that they provide a strong future foruniversities and a fair deal for students.

Labour proposals for reforming university and student funding:

September 2004o Grant of £1,000 per year restored for students from lower incomefamilies.

April 2005o Threshold at which graduates have to start paying off their loanraised from £10,000 to £15,00, bringing a saving of £450 per year. Agraduate earning £20,000 will pay back around £38 a month.

September 2006o Abolition of requirement to pay fees before or while you are studying.o Universities able to set a fee from £0 - £3,000 per year - but onlyif they meet tough conditions on access and bursaries, approved by a new independent Access Regulator.o Fee level ? apart from inflation - capped for the whole of the nextParliament.o Government keeps paying all or part of first £1,000 of fee up tofamily income of £30,000.

For further information visit the DfES website at www.dfes.gov.uk orLabour's website at www.labour.org.uk/cche which includes answers tofrequently asked questions.